Arbeitspapier
Ramsey Pricing Revisited: Natural Monopoly Regulation with Evaders
We consider a model featuring a single-product natural monopoly, which faces evaders, i.e., individuals that may not pay the price. By exerting a costly effort, the firm can deter evasion. To maximize the total surplus, a regulator sets the price, the level of deterrence effort, and socially costly transfers to ensure the monopoly's participation. We obtain a modified Ramsey formula, which clearly shows that the mere existence of evaders dampens the use of the price as a mean to finance the firm's deficit. The regulated price is always below the monopoly price and, under sufficient conditions, also below marginal cost. Then, we generalize the model to incorporate moral hazard. Finally, we undertake an empirical application of our results, which shows quantitatively that the downward tendency of regulated prices in a context of high evasion is significant.
- Sprache
-
Englisch
- Erschienen in
-
Series: CESifo Working Paper ; No. 10732
- Klassifikation
-
Wirtschaft
Market Structure, Pricing, and Design: Monopoly
Taxation, Subsidies, and Revenue: General
Legal Monopolies and Regulation or Deregulation
Economics of Regulation
- Thema
-
regulation
natural monopoly
evasion and marginal cost of public funds
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Besfamille, Martin
Figueroa, Nicolás
Guzmán, Léon
- Ereignis
-
Veröffentlichung
- (wer)
-
Center for Economic Studies and ifo Institute (CESifo)
- (wo)
-
Munich
- (wann)
-
2023
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:45 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Besfamille, Martin
- Figueroa, Nicolás
- Guzmán, Léon
- Center for Economic Studies and ifo Institute (CESifo)
Entstanden
- 2023
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